Brazil in 2009

Area:

8,514,877 sq km (3,287,612 sq mi)

Population

(2009 est.): 191,481,000

Capital:

Brasília

Head of state and government:

President Luiz Inácio Lula da Silva

Anticipation of the October 2010 presidential and congressional elections dominated politics in Brazil in 2009. In mid-April, Pres. Luiz Inácio Lula da Silva formally articulated his preference for Dilma Rousseff, his chief of staff, to be the presidential candidate of the ruling Workers’ Party (PT). Among the opposition, Gov. José Serra of São Paulo state and Gov. Aecio Neves of Minas Gerais state spent the year positioning themselves to become the official candidate of the Brazilian Social Democratic Party. Another official believed to be planning a presidential run was Marina Silva, a former minister of the environment and current senator from the state of Acre, who defected from the PT in August to join the Green Party. Several other senators and more than two dozen federal deputies also changed political parties during the year as a means of improving their chances of holding on to office. In addition, a number of members of Lula’s cabinet were expected to resign their posts by April 2010, a mandatory step for cabinet ministers who wished to run in the elections.

New oil discoveries continued to be made by the Brazilian state oil company, Petrobrás, and its partners in the ultra-deepwater subsalt areas of the Santos basin. Multiple discoveries over the previous three years of multibillion-barrel reserves raised Brazil’s profile as a top future oil producer and gave impetus to increased investment in ports, shipyards, naval construction, refineries, and oil and gas exploration. On August 31 Lula unveiled the federal government’s plan for a new regulatory regime to manage this new oil wealth. He proposed the creation of a new government enterprise, called Petrosal, to manage and oversee the contracts for subsalt exploration and production. Under this regime Petrobrás would be the only operator with a guaranteed stake of 30% in each concession. Moreover, current royalty distributions would be changed, and a social and environmental fund would be created to spread oil revenues to other states outside the production areas. These provisions caused fiery debate from the producer regions, which stood to lose revenues from royalties, as well as from those who viewed the new regulatory body as a redundant bureaucracy. The proposal was certain to become a major campaign issue in 2010.

Through its Growth Acceleration Program, which aimed to boost the country’s economic growth to 5% annually, the federal government continued its funding of social and educational projects, rural-electrification efforts, housing initiatives, and infrastructure development. The Brazilian Congress, however, was prevented from advancing on any meaningful reforms by a corruption scandal that embroiled the Senate for much of the year. Agaciel Maia, who had served as the director general of the Senate since 1995, resigned his post in early March after allegations emerged that he had hidden ownership of a mansion in Brasília from federal tax authorities. An ensuing investigation linked Maia to the operation of a secret Senate bank account and to the awarding of lucrative patronage jobs and pay raises via hundreds of secret acts that were passed by the Senate during Maia’s tenure as director general. Also implicated in the scandal was the president of the Senate, José Sarney, who was accused of having approved the secret acts and of having secured jobs for a number of his family members and political allies.

As Sarney and others faced mounting evidence of corruption, many in Congress called for his ouster. On August 19, however, the Senate Ethics Committee absolved Sarney of all accusations. Also in August, Sarney’s son, Fernando, who faced allegations of money laundering, won an injunction from Federal District Court Judge Dácio Vieira that prohibited any reporting of accusations against him by one of Brazil’s leading daily newspapers, O Estado de São Paulo. The newspaper sought to overturn this injunction, but on December 10 Brazil’s Supreme Court ruled against the newspaper’s appeal of Vieira’s decision.

By a vote of 10 to 1, the Supreme Court in March ruled in favour of a continuous demarcation of the Raposa Serra do Sol Indian reservation, located in northern Roraima state near the Venezuelan and Guyanese borders, and ordered all non-Indians to exit the reserve and end economic activities there by April 30. Brazil also moved forward with infrastructure investments in the country’s Amazon region. Three major hydroelectric power plants were planned for the region; these included the Santo Antonio and Jirau projects in Rondônia state and the Belo Monte project in Pará state. The Brazilian Environmental Institute on June 3 approved an economic-impact study for the Jirau project, clearing the way for construction on the project to begin.

At its meeting in Copenhagen on October 2, the International Olympic Committee (IOC) chose Rio de Janeiro as the site of the 2016 Olympic Games; Rio was selected over three other finalists—Madrid, Tokyo, and Chicago—and would become the first city in South America to host an Olympics. The IOC decision came just months after the May 31 selection by the Fédération Internationale de Football Association of 12 Brazilian cities to host World Cup matches in 2014. On October 17, however, Brazil was reminded of the major public safety challenge it faced ahead of these events as violence in Rio de Janeiro between drug gangs and police left at least 26 people dead. The country also faced infrastructure challenges. This was underscored by a nationwide blackout that occurred on November 10 as transmission problems at the Itaipú hydroelectric power plant spurred a prolonged power outage.

The year saw Brazil emerge relatively unscathed by the global economic crisis. For the 12-month period ended on September 30, GDP shrank just 1%. The central bank’s Open Market Committee reduced the benchmark discount interest rate from 13.75% to 8.75% at year’s end, affording Brazil an opportunity to cut barriers to credit and help stimulate domestic consumer spending. The Lula administration also extended and granted tax breaks on consumer purchases of automobiles, motorcycles, and appliances. Accumulated inflation as measured by the National Consumer Price Index was 3.93% through November.